SPENDING MAY CONTINUE TO INCREASE IN FY’2020
Despite earlier predictions that fiscal year 2019 would be a high-water mark in terms of government spending, both Senate Republicans and House Democrats are saying that spending may continue to rise next year. Republican Senate Budget Committee Chair Mike Enzi (R-WY) said last week that he expects the increase. The reason is that spending increases will likely be tied to a deal to raise budget caps, as well as a potential increase in the federal debt ceiling.Without a deal to lift the caps, defense spending would drop 11% and non-defense discretionary spending would drop 9%. This differs from a White House plan to cut defense spending by 14% in 2020 from FY’19 levels, but then add much of that money back via the budgeting gimmick of adding funding to Overseas Contingency Operations money. Those dollars are specifically excluded from counting against federal budget caps. House Budget Chairman John Yarmuth (D-Ky.) also said that he expects a deal to increase defense and non-defense discretionary spending by roughly equal amounts from fiscal 2019 to 2020. This is generally good news for contractors as it means that opportunities for new business should continue to develop. Everything from professional services to cyber to IT enhancements may be realize increased funding. Emerging areas such as AI would also likely see increased dollars. No one is asking where the money will actually come from, but that hasn’t stopped Congress from increasing spending before. While both Enzi and Yarmuth support a two year budget deal, most feds and contractors would just settle for passing spending bills on time.